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Life lessons

James Harvey of James Harvey Associates follows life planning guru George Kinder’s approach for getting to the heart of a client’s life goals. Cherry Reynard reports on the firm’s RDR transition

Life planning guru George Kinder has a growing following among UK financial advisers. He teaches that understanding a client’s real ambitions and desires is the key to devising a financial plan that meets their needs over the long-term. James Harvey of Ealing-based James Harvey Associates is one of only 10 Kinder-registered life planners in the UK and says it informs his whole approach to delivering advice.

The Kinder Institute philosophy stands in stark contrast to the way much financial advice has been given to date. Kinder talks of melding clients’ “deepest human aspirations” with rigorous financial planning, which is a far cry from shoehorning a client into whatever products are available. It is an approach that chimes with the post-RDR world, which is focused on client need rather than the distribution of products.

To the uninitiated, the requirements can sound eccentric. A life planner will ask three main questions aimed at getting to the heart of people’s true life goals. First, they will ask clients to assume they have got all the money they need. What would they do with it? How would they live? Then they ask clients to imagine they only have five or 10 years to live: How would they live those years? Finally, they ask clients to imagine they have only 24 hours to live. What did they miss doing? What did they not get to do?

Harvey has found that these questions really get to the heart of what motivates people. Only once he has understood that as well as possible will he be able to give them a financial plan that meets their needs. Quite often, they don’t understand it themselves and the questions will draw out their hopes and desires that they did not know they had.

He says: “BMWs and holidays are lovely but life is more about relationships. I aim to help people work out their priorities. It’s certainly not where all clients are at and I have to work it in subtly.”

To illustrate how life planning can help, Kinder uses the example of a man who came to him looking to buy an investment property in Massachusetts. He talked about the type of returns he could get from the building and wanted to discuss how he could generate enough income over the next 10 years or so to be able to afford it. This was achievable but would require working longer hours and spending less time with his family.

After asking those questions, however, Kinder found that the man really just wanted a better relationship with his son. Since the new project would directly affect this ambition, it was clear that he needed to rethink his goals. Ultimately, he shelved the project and structured his life so he could dedicate more time to his son instead.

Harvey sees similar examples in his work all the time. He is also bold enough now to turn clients away who do not want to work in this way. He adds: “I have also had to accept that if this is not the approach for them, then I may not be the IFA for them.”

It has been a long journey. Harvey’s background was classic life office sales. He founded the business in 1998 after 16 years working for Allied Dunbar. Although he had some professional connections, he found the most fruitful route to building up his client base came through seminars. He ran several in West London, sending out thousands of invitations to generate 50 or so attendees of which 10-15 became clients. He also bought the client bank of a retiring adviser. The business now has around 275 clients.

Harvey’s typical clients are lawyers or other professionals. They may be running a business and tend to be in their late forties or fifties. It goes without saying that they must be prepared to pay his fees but most important for Harvey is that they want independent advice and the relationship is right.

Utopia is to get paid for where you add value
Harvey says he started down the road to transition with little idea of where he was going. He tried to jump to the “solution” far too quickly and believes he has still got some way to go.

He says utopia is to get paid for where you are adding value. “This would mean charging a fee for the strategy work. The implementation, on the other hand, takes no time and yet clients are happy to pay high fees for implementation. But if a client walked away after the planning point, it would be good not to have lost money. More established firms would be able to set that top fee higher.”

Harvey has spent some time defining his fee structure. He introduced fees in 2004 but only decided to stop all commission in 2008. As of January 1 this year, all his new clients are brought in on the basis that there is a strategy fee, an implementation fee and an ongoing fee. The strategy fee covers initial planning, the implantation fee covers products and the ongoing fee covers reviews.

He says the client relationship is very different from his transactional days. “In transactional mode, you get the job done and then work out whether it’s a one-off or an ongoing relationship. Now it’s different, you are trying to build a relationship up front.”

The transition so far has not been plain sailing. The move to fees did hit the practice’s overall income, particularly as he could not bump up profits with hefty one-off commission. Equally, he found it tough to define his proposition. He had been in the business for 20 years but it still took him four years to get it straight. He said: “It was a bit like going round a race track, I couldn’t have seen the second bit from the first bit.”

At the moment, James Harvey Associates comprises two advisers, a trainee paraplanner and an office manager. He says: “I think paraplanners offer a good way to get new blood into the industry. We were conscious of bringing in someone who could be an adviser in the long-term. Our paraplanner has more contact with clients.”

A lot of Harvey’s advice is based around lifetime cashflow and shifting that cashflow for clients’ changing needs, for example, when their children are at school or after retirement. The paraplanner will also undertake a lot of the lifetime cashflow modelling.

Harvey still does a lot of pension and protection work. As part of his emphasis on life planning, he prefers to deal with individuals rather than big group schemes. The investment offering is based on widely diversified passive portfolios. He particularly favours the Dimensional funds. This under-the-radar US fund group specialises in providing low-cost portfolios with managed asset allocation. Slightly more sophisticated than a simple tracker fund, the asset allocation is strategic rather than tactical. He says: “Clients pay 0.3-0.5 per cent a year to the fund manager and we review the holdings twice a year. We have had no resistance at all from our clients on this.” The majority of the group’s assets are on Transact.

The next step for Harvey is to finish the transition to fees. He is also keen to embed life planning more firmly in his business. He has been implementing it for every new client since January.

He says: “The process should be enjoyable. It should be about clients using financial planning to get the life they want.”

Company data

  • Number of RIs: two
  • Outsourced investment management: No but strategic asset allocation using Dimensional L&G, and some ETFs for low-cost investment exposure
  • Wrap provider? Just Transact. We previously used Skandia and still have funds with them but it is not moving fast enough to the passive arena.
  • Back-office provider: JCS
  • Networks/nationals: Directly authorised. Use Paradigm for compliance services
  • Members of associations? IFP, CII, PFS
  • Qualifications? Life planner, CFP, FPC 1-3, G10 (taxation and trusts), G20 (personal financial planning), G60 (pensions) Number of clients: 275

Key points

  • Harvey has found the work of George Kinder useful in shaping the way he deals with clients
  • He aims to get to the heart of what motivates clients before devising their financial plan
  • He built up his client base through seminars and professional connections
  • He has had to shift his approach to the client relationship since introducing fees He has encountered no resistance to introducing low-cost, asset allocation group Dimensional to manage a significant chunk of his clients’ assets


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